CIR 12A.3 CIR 12A.3 Custody of Fund Property
CIR 12A.3.1 CIR 12A.3.1(1) For the purposes of Article 27(1)(e) of the Law, the
Fund Managerof a Qualified Investor Fundthat is not an Investment Trustmust ensure that the legal title to Fund Propertyis registered with an Eligible Custodian.(2) The requirement in Article 27(1)(e) of the Law does not apply to the Fund Managerof a Qualified Investor Fundif it is:(a) a Property Fund;(b) a Private Equity Fund;(c) a Venture Capital Fund; or(d) a Fundin so far as it is investing in an interest in the operation of a Real Propertyasset (such as investment in an infrastructure project).(3) If the Fund Managerof a Qualified Investor Fundreferred to in (2) itself holds Fund Propertyof any kind or if it uses a Fund Platform and the Incorporated Cell Company holds Fund Property of any kind, it must have in place effective arrangements which ensure that the Fund Propertyis not available to creditors in the event of the insolvency of the Fund Manageror the Incorporated Cell Company (as the case may be).
CIR 12A.3.1 Guidance1. Article 27(1)(e) of the Law requires a
Domestic Fundthat is not an Investment Trustto have legal title to the Fund Propertyregistered with an eligible person (unless the Rules provide otherwise). CIR Rule 12A.3.1(1) specifies that the person must be an Eligible Custodian. CIR Rule 12A.3.1(2) disapplies the requirement in relation to Fund Propertyof certain kinds of Qualified Investor Funds. Regardless of who holds title to Fund Property, the Fund Managermust always ensure that, in accordance with Article 22(2)(f) of the Law, Fund Propertyis clearly identified as such and held separately from property of the Fund Managerand any other Funds. Where Fund Property consists of cash or liquid assets, the assets must also be held under arrangements that clearly identify them as belonging to the Fund, and must be properly segregated from similar assets belonging to the Fund Manager and any other Funds.2. Where a Fundinvests in infrastructure projects (for example, the development of public facilities such as roads, railways or bridges), the Fund Managermay hold self-custody of the Fund Propertywhich consists of the interest in the infrastructure project. However, where it does so, the Fund Manageris not exempt from the overarching obligation under CIR 8.2.2(1) to Unitholdersof the QIF to ensure safe custody of the Fund Property. This envisages proper identification and segregation of the interest in the infrastructure project as Fund Propertyof the QIF.